Q4 Banking Weather Report🌧

Good afternoon! Today we will be covering U.S. banks' Q4 performance, escalating Houthi attacks, BlackRock's $12.5B acquisition, and the debut of Bitcoin ETFs—highlighting key global financial shifts.
Reading time: 3.5 Min

FINANCE
🏛The Banking weather report in Q4

Major U.S. banks, including JPMorgan, Wells Fargo, Bank of America, and Citigroup, faced a challenging Q4 marked by falling profits, special charges, and job cuts. Despite concerns about waning income boosts from high U.S. Federal Reserve interest rates, the banks expressed optimism about the economy, highlighting consumer resilience.

JPMorgan CEO Jamie Dimon noted ongoing consumer spending but warned of potential inflation stickiness and higher rates due to government spending. Wells Fargo raised concerns about market uncertainty amid potential rate cuts.

While banks set aside over $8 billion to refill the FDIC's fund, Citigroup faced a dismal quarter with a surprise $1.8 billion loss and plans to cut 20,000 jobs. Banks grappled with souring loans, emphasizing challenges in the post-pandemic credit landscape. Analysts remain cautious, watching interest rate impacts and core revenue trends.

SHIPPING
🚢Red Sea situation intensifies

The U.S. and British military launched airstrikes in Yemen in response to Houthi attacks on Red Sea shipping. The strikes targeted Houthi missile and drone capabilities, with over 100 precision-guided munitions hitting 60 targets.

The move came after the Houthi forces, backed by Iran, conducted months of attacks on shipping lanes, presenting them as a response to the Israel-Hamas conflict. The U.S. President, Joe Biden, emphasized that such attacks on personnel and freedom of navigation would not be tolerated.

While the U.S. and its allies supported the strikes, concerns arise over potential escalation. The impact on global shipping, oil prices, and regional stability remains uncertain. Some major U.S. allies, including Italy, Spain, and France, did not participate, expressing fears of wider escalation. The situation adds complexity to an already fragile geopolitical landscape.

M&A
🏦BlackRock’s $12.5 Billion power move

US investment firm BlackRock has acquired Global Infrastructure Partners (GIP), which owns assets such as Gatwick airport and the Suez wastewater group, in a $12.5bn deal.

The acquisition promises a significant payday for GIP's founders, including CEO Adebayo Ogunlesi, an influential dealmaker and former Credit Suisse banker. BlackRock's purchase makes it the world's second-largest infrastructure investor.

GIP, initiated in 2006 with $500m each from General Electric and Credit Suisse, owns 40 companies with $75bn in annual revenues. The acquisition aligns with BlackRock's strategy to leverage global infrastructure spending, involving a $3bn cash payment and 12 million of its shares.

STOCK MARKET
Bitcoin ETFs debut with $4.6 billion in trades

U.S.-listed bitcoin exchange-traded funds (ETFs) witnessed $4.6 billion in trading following approval from the U.S. securities regulator. Eleven spot bitcoin ETFs, including BlackRock's iShares Bitcoin Trust, Grayscale Bitcoin Trust, and ARK 21Shares Bitcoin ETF, initiated fierce competition. Grayscale, BlackRock, and Fidelity dominated trading volumes.

The ETF green light boosted Bitcoin's price to its highest since December 2021. Despite the regulatory nod, skepticism remains, with Vanguard rejecting the new ETFs. The competition for market share led issuers to slash fees below industry standards. Grayscale's conversion into an ETF overnight made it the world's largest bitcoin ETF, with over $28 billion in assets under management.

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